Business context and reporting period
This is FG New America Acquisition Corp.’s unaudited Form 10-Q for the quarter ended March 31, 2021—not an operating-company 10-Q filed under the name OppFi Inc. FG New America was a blank-check company that had not commenced operations or generated revenue. It signed a business combination agreement with Opportunity Financial, LLC (“OppFi”) on February 9, 2021; the proposed transaction was not yet completed at quarter-end.
Financial results and position
| Metric | Q1 2021 or March 31, 2021 |
|---|---|
| Revenue | No operating revenue |
| General and administrative expenses | $1.811 million |
| Net loss | $3.086 million; $0.33 per share, basic and diluted |
| Interest income on trust investments | $6,002 |
| Loss from change in warrant fair value | $1.281 million |
| Cash and current assets | $575,403 cash; $787,905 total current assets |
| Trust-account securities | $243.387 million |
| Current liabilities | $1.368 million, all accounts payable |
| Warrant liabilities | $23.717 million |
| Cash flow | $556,281 used in operating activities; $562,282 net decrease in cash |
| Debt and total stockholders’ equity | No long-term debt reported; $5.000 million equity |
The filing provides no Q1 2020 income-statement comparison. From December 31, 2020 to March 31, 2021, cash outside the trust fell from $1.138 million to $575,403; accounts payable rose from $135,648 to $1.368 million; and warrant liabilities increased from $22.436 million to $23.717 million. Trust assets were nearly unchanged. Public shares subject to possible redemption are classified as temporary equity, separately from stockholders’ equity.
Transaction, outlook, and risks
- The proposed transaction valued OppFi’s equity at $743 million and contemplated an “Up-C” structure. Assuming no redemptions, FG New America expected to own approximately 38% of OppFi units and control OppFi as its sole manager. The filing describes this as a proposed outcome, not a completed transaction.
- OppFi’s obligation to close was conditioned on at least $200 million of Available Closing Date Cash, alongside customary conditions including stockholder approval. Redemptions, expenses, and cash balances could affect closing proceeds.
- The agreement contemplated 25.5 million earnout units subject to performance-based restrictions and potential forfeiture, exchange rights for retained units beginning six months after closing, and a tax receivable agreement under which OppFi Inc. would pay members 90% of specified realized tax savings.
- Management said outside-trust cash was intended to fund transaction search and costs and believed it sufficient through October 2, 2022, but cautioned that actual costs or significant redemptions could require additional financing. The SPAC had 24 months from its October 2020 IPO to complete a business combination or face liquidation under its charter.
- Warrant fair-value changes are non-cash and materially affected reported loss. Private warrant valuations rely on Level 3 model inputs, including an estimated 70% probability of completing a business combination.
- Management concluded disclosure controls were ineffective because of a material weakness in warrant accounting. Remediation was underway, with no assurance it would be successful. The filing reported no material change to previously disclosed risk factors and no legal proceedings.
Important facts to verify
- Confirm the status and final terms of the OppFi business combination, including closing conditions, redemptions, Available Closing Date Cash, and ownership dilution.
- Review OppFi’s separate operating-company financial statements for revenue, profitability, cash flow, debt, liquidity, and trends; this SPAC filing does not provide them.
- Assess the warrant-accounting material weakness, remediation progress, and sensitivity of the warrant liability to valuation assumptions.
- Review the final earnout, exchange, governance, lock-up, and tax receivable agreement terms, including the 90% tax-savings sharing provision.
- Reconcile the warrant fair-value change: the statement of operations reports $1,281,023, while the fair-value roll-forward reports $1,281,024.